The 4, maybe 5, types of money in Zimbabwe…

Over the last couple of months a lot has been happening on the money side. Techzim has covered it extensively here but still we’re yet to see someone take time out and spell it all out for us – this is me doing it for myself and hopefully one, maybe two people will benefit.

The Reserve Bank of Zimbabwe has of late not been considered a “friend of the people”, some have mentioned that the pre-2008 era eroded what little trust we had in the banking system and just when we were getting back into the groove, they decided to pull a ‘bond note‘ on us. I’m no financial expert, so I won’t try and delve into what the introduction of the bond note did to the banking system.

As of today, 9 March 2017, Zimbabweans have adapted to what is there (“totamba nezviripo”) and as such there are now a “number of currencies” that are circulating in Zimbabwe.

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Here goes:

1. US Dollars/Foreign Currency outside Zimbabwe

As we are a net importer of goods as a nation, almost every business wants to buy their stock from beyond our borders and bring it here to sell. Yes, this is not the best way and we should as a nation be working towards reviving our industries and producing local. That’s what SI 64 of 2016 was all about, but I digress.

Any money that is outside Zimbabwe already and able to buy goods there is valuable. People are being known to pay a premium for it (and no, don’t inbox me asking me the rate and if I can hook you up). If you are outside the country and have some funds that you want to send here, be sure to check with friends and family whether they’d prefer for you to buy some stuff for them instead and they settle your bills here in return. Those who legally know, please advise whether this is what is classified as “externalisation”.

2. US Dollars/Foreign Currency inside Zimbabwe

The age old adage goes, “cash is King” – this is so true when you have ‘hard currency’. Again pointing to how most businesses need to import and them needing to do this in forex. Apparently, if you are paying in ‘hard currency’ you can negotiate for a 15-30% discount, depending on the amount of purchase.

However, note that this discount can not be sought at more established businesses like Supermarkets, mobile networks, Government offices. But what I hear people do is they look for someone who wants US dollars and they check if they’re willing to sell their bill for 15-30% less in cash. RBZ has been clear that this is illegal. So, no, don’t do it!

3. Bond Notes

For those of you who are not too familiar with what this may be, it’s like our own currency, that only works in Zimbabwe and is valued at the same rate as the US dollar. Yeah, we’re powerful like that as a nation!

I’m not going to tell you about how it actually gets you more US dollars, but as this is cash it’s way easier for it to be converted to US dollars (which need I remind you is what is used to buy outside the country). Some fuel retailers are offering a discount when you pay with ‘cash’ and they also classify bond notes as cash, so it’s best to ask what kind of a discount they’ll give if you pay using them. The RBZ has warned against these type of discounts even though businesses are offering them openly so it’s a bit confusing.

As the banks are limiting how much each of their customers can withdraw on a daily basis, I’m sure if your payment is north of $200 the receiving party will be willing to extend some kind of a discount.

4. Ecocash / Cash in banks with ZIPIT/Ecocash / Internal transfer

Though this is money in the “banking system”, they are valued more as they are quickly transferable to someone else – almost instant. As Zimbabwe is a more informal economy, people want to buy their goods and be on their way, so sellers will prefer money from any of these sources that will allow them to get paid instantly and be on their way.

For those of you who are not sure of what ZIPIT is, Techzim wrote an article some years ago (information still holds true), but essentially it is a way to instantly transfer money from one bank account to another (provided both banks are on Zimswitch).

Having the same bank account with your supplier is critical too. This will allow you to make payment and for it to instantly reflect into the account of the seller, which most small businesses want, as opposed to you making payment then they are left chasing after ‘reference numbers‘ to chase up their payment. How do you know which account to open that most of your suppliers will have? You don’t, at least I didn’t and have been ‘forced’ to open a bank account with almost every bank.

5. Money in banks that don’t connect to ZIPIT or Ecocash / Different banks to your supplier

At one stage the ‘international banks’ were a prized lot. We looked at them with envy. Would try to open accounts with them but be told, in a boastful voice: “sorry we’re not opening new accounts at the moment”. Imagine that.

Well, from what I’ve seen and experienced they’re not so glamourous anymore. Ok, maybe me pacifying myself because they refused me an account, but still.

Having an account that is not integrated to ZIPIT or Ecocash can be problematic for when you need to make instant payments – you have to promise someone 24-48 hours for their payment to reflect. Most businesses, to safeguard themselves, tell you that you can only take possession of your goods “once the money reflects” in their account.

This has not been an article to try and tell you which is the best bank account to open in Zimbabwe, but for those that are interested in knowing how money/cash is flowing in Zimbabwe and for you to have a better understanding when making a payment (or receiving one).

Bond Notes are a currency of notes backed by a bond that the Zimbabwe government announced on 4 May 2016 by Reserve Bank of Zimbabwe (RBZ) governor John Mangudya. The $2 denomination of the notes was finally introduced on 28 November 2016. More notes were... Read More About Bond Notes

EcoCash is a mobile money transfer facility which is run by Econet Wireless Zimbabwe. The facility has grown in leaps and bounds since its inception and is arguably the largest mobile money transfer agent considering the huge sums of transactions that the platform is said... Read More About EcoCash

The Reserve Bank of Zimbabwe (RBZ) is the central bank of Zimbabwe. Its offices are located at number 80 Samora Machel Avenue in Harare. The Reserve Bank of Zimbabwe operates under the Reserve Bank of Zimbabwe Act, Chapter 22: 15 of 1964. The Act provides... Read More About Reserve Bank of Zimbabwe

7 Comments

Good write up William. I have also observed that the “Bond Notes” are exchanged as equal to US Dollars when you are buying items that normally cost less, like say less than $100.00. If you try to purchase an item that cost say over $1,000.00 most suppliers will rate the Bond Note as inferior to US dollar. Off course formal large scale retailers like Pick’n Pay wont do that. I have experienced that at Bathroom Boutique where they limit to $400.00 the maximum amount you can pay as cash for one to benefit for up to 40% discount. Chinese brick suppliers also have different prices for US dollars and Bond Notes.

How can you stay clear of BitCoin yet there’s a recent article (on this site) claiming a local BitCoin exchange has processed $100,000 USD worth of transactions in 2016 and is targeting a $1M by 2018? I’m pretty sure people are using other Bitcoin exchanges as well, so why has Bitcoin been excluded without sufficient explanation.This is a tech site, Bitcoin is tech isn’t it, otherwise this article just another economics of Zimbabwe piece of which there are plenty to go around.

MY OBSERVATION IS THAT INDEED IN BIG RETAIL SHOPS THE BOND COIN IS TRADING AT PAR WITH USD BUT WAIT MAYBE NOT.. THIS MAY BE JUST A COVER FOR THE AUTHORITIES NOT TO COME DOWN ON THEM LIKE A TONNE OF BRICKS. THESE RETAILERS HAVE LEARNT FROM PREVIOUS EXPERIENCE THAT DOUBLE PRICING WILL GET THEM INTO TROUBLE. CLEVER AS THEY ARE THEY HAVE CIRCUMVENTED THIS BY INCREASING THE PRICES OF ESSENTIALLY EVERYTHING AND THEREBY ALLOW THE BOND TO TRADE AT PAR WITH USD. E.G 1KG MEAT IN OK USED TO BE BELOW US$5, NOW THE SAME KG IS OVER US$8. I DONT THINK THIS WAS A RESULT OF A HIGHER COST OF RAISING A COW..THE BOND NOTE IS INDIRECTLY TRADING OUT OF PAR WITH USD BUT AT LAW WITH IT. SADLY THE POWERS THAT BE ARE SEEING THE PARITY AS BOND HOLDING GROUND…ITS NOT. PLASTIC MONEY IS OPERATING IN THESE FORMAL RETAILS CHAINS EVERYWHERE ELSE WHERE PRICE SANITY HAD PREVAILED YOU WILL NOT FIND A SWIPING MACHINE ITS ALL CASH. IMPORTERS OWNING SMALLER SPARES SHOPS ETC WILL NOT TAKE 1OO% BOND UNDERSTANDIBLY SO. ECOCASH IS LITERALLY NOW A TOOL FOR THE AGENTS TO AMASS CASH. CASHIN IS READILY AVAILABLE FOR ANY AMOUNT. CASHOUT IS VIRTUALLY NON-EXISTANT.